Lloyds in lifeline deal with MIH

Lloyds Banking Group has doubled its ownership stake in one of Scotland's largest privately-owned companies after it suffered a £175m loss.

The bank now owns almost 25% of Murray International Holdings (MIH) as part of moves to get debt under control.

MIH is owned by Sir David Murray and through the company he controls more than 90% of Rangers Football Club.

Most of the MIH loss came from sharp falls in commercial property values and metal prices during the credit crunch.

The £175m figure, calculated after tax, also included a £12.7m loss last year for Rangers Football Club.

Sir David told the BBC his business suffered from four adverse impacts.

Its bank, Halifax Bank of Scotland, ran into serious trouble, and was taken over as part of Lloyds Banking Group.

It has worked through its extensive exposure to corporate lending, particularly in commercial property, and while Lloyds has withdrawn support from some large property firms, forcing them to collapse, it has agreed a debt-for-equity swap for MIH, giving it a 24% stake.

The restructuring means that the complex financing of MIH is being disentangled, removing cross-guarantees between its divisions.

The fall in the commercial property market lost Murray £154m in valuation over the 17 months to the middle of last year that are covered by the accounts.

He said this could have been worse if he had previously done as other property companies did, with a revaluation to reflect sharply rising prices before the credit crunch.

Metal prices halved during the accounting period, and Sir David was forced to sell off stock at a loss.

Also, Rangers suffered a bad season in European competition, leaving it with a loss and debts sharply up to £31m.

New players

But the company chairman reckons on turning a profit this year. Sir David cites property deals that show the market is coming back, while metal prices have risen sharply in the first quarter of this year.

Rangers have also had a better season, winning the Scottish Premier League and re-qualifying for the Champions League.

Sir David told the BBC there was "a limited fund" to buy new players, after a long period when the club had not been able to do so.

He said it was obvious that new players were needed, and that the board - chaired by Alistair Johnston since Sir David stood aside - was drawing up a new business plan to keep it going while the club continues a long wait to find a buyer of the MIH stake.

Sir David said: "I can confirm that we'll make an operating profit this year, with no further property right-downs.

"We've got some very good businesses in our portfolio. I'm confident we're back on the road after a difficult time.

"The Bank of Scotland was lending a lot of money, and we're guilty of borrowing too much in the property sector."

MIH employs 3,500 people worldwide in the metals, property, technology, sports, marketing and mining sectors.

Theo BBC